Accountancy

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Accountancy

Rama, brothers earn a net profit of Rs 25000 with a capital of Rs 200000.The normal rate of return in the business is 10% . Use capitalization of super profit method to value the goodwill

Accountancy

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Answer 1

Answer #1

Normal profit=200000×10/100

Super profit=average profit- normal profit

=25000-20000=5000

Goodwill=super profit×100/normal rate of return

5000×100/10=50000

answered by: Advika

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Answer 2

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